Cryptocurrency crimes amounting to nearly ₹953.70 crore ($129 million) have been reported so far, according to the Indian Finance Minister, Nirmala Sitharaman. She informed the Parliament that the increasing use of virtual assets for money laundering and terrorist financing has prompted the Financial Action Task Force (FATF) to introduce amendments.
This announcement was in response to concerns raised by Dravida Munnetra Kazhagam (DMK) MP Velusamy P about the growing use of virtual assets for criminal activities and how the government was detecting and monitoring such activities.
The Reserve Bank of India (RBI) has also circulated public notices cautioning people about the risks associated with cryptocurrencies, and advising its regulated entities to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT), and obligations under the Prevention of Money Laundering Act (PMLA), 2002.
The use of cryptocurrencies has been a topic of debate in India for several years, with the government considering banning them altogether. However, there are also voices within the country who believe that regulating cryptocurrencies could be a more effective approach.
The FATF has recognized the need to regulate virtual assets to prevent their misuse for illegal activities. In March 2021, the FATF issued updated guidance to help countries and the private sector understand and comply with their obligations under the FATF Recommendations with regard to virtual assets and virtual asset service providers (VASPs).
The FATF has also called on countries to ensure that VASPs are subject to effective regulation and supervision or monitoring for AML/CFT purposes, and to implement the necessary measures to prevent the misuse of virtual assets for money laundering and terrorist financing.
India’s stance on cryptocurrencies is evolving, and it remains to be seen how the government will address the issues associated with their use. While some experts believe that regulation could help to prevent their misuse, others argue that cryptocurrencies’ anonymous and decentralized nature makes them difficult to regulate effectively.
In any case, it is clear that the Indian government and regulatory authorities are taking the issue of cryptocurrency crimes seriously and are actively working to prevent their occurrence in the country. The public notices issued by the RBI and the measures being implemented by the FATF demonstrate the government’s commitment to combating the misuse of virtual assets for illegal activities.